TMI Blog2016 (2) TMI 704X X X X Extracts X X X X X X X X Extracts X X X X ..... f purchase and sale of shares being repetitive and the assessee has dealt in large number of companies, the prime objective of such transactions which are concluded within one month in our considered view is to earn and maximize profits in shortest period of time which is akin to intention of doing business by maximizing profits while dealing in sale and purchase of shares rather to hold shares as investment with a vision to earn dividend and other benefits attached to holding of shares such as entitlement to right shares, bonus shares etc.. House property income - Reduction of Charges on account of society maintenance charges and Municipal Corporation taxes from the gross rental received - Held that:- We have observed that the assessee has paid society maintenance charges which is stated to be the obligation of the lessee and the same is duly included in the rent received by the assessee. In our considered view, this issue is squarely covered by the decisions of the Tribunal in the cases of Sharmila Tagore (2004 (6) TMI 591 - ITAT MUMBAI) and Bombay Oil Industries (2000 (11) TMI 1225 - ITAT MUMBAI). Respectfully following the decisions of the Tribunal in the cases cited (supra) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held for period less than one year, the major portion of gains is attributable to shares held for period exceeding one month and upto twelve months. 2. RESTRICTING THE DEDUCTION IN RESPECT OF SOCIETY MAINTENANCE CHARGES TO THE EXTENT OF MUNICIPAL TAXES AMOUNTING TO ₹ 62,175/- WHILE COMPUTING INCOME UNDER THE HEAD INCOME FROM HOUSE PROPERTY 2.1 On the facts and in the circumstances of the case and in law, the Commissioner of Income Tax (Appeals) erred in upholding the action of the Income Tax Officer in restricting the deduction in respect of Society maintenance charges amounting to ₹ 62,175/- while computing income under the head Income from House Property 2.2 In doing so, the Commissioner of Income Tax (Appeals) erred in the following respects. 2.2.1 In not appreciating the fact that rent received during the year under reference and offered to tax is inclusive of society maintenance charges and also the fact that the rent received during the year under reference, after excluding the society maintenance charges received was more than the letting value fixed by the Municipal Corporation/Standard Rent. 2.2.2 In not appreciating the fact that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 160 ITR 67) and of the Authority for Advance Rulings (AAR) in the case of Fidelity Group. The broad principles can be summarized thus:- a. Whether or not there is frequency in the transactions and whether they are numerous. b. The total number of scrips involved i.e. whether transactions are effective. c. Average holding period of various scrips. d. Motive of the assessee. Based upon the above, the A.O. concluded that the assessee has entered into over 200 transactions of purchase and sale each for accruing the said gains of ₹ 6,76,915/- which was offered for tax by the assessee as short term capital gains . The assessee has dealt in over 100 different scrips during the year under consideration. Out of the total transactions, the period of holding in over 100 instances is less than three months, out of which in 65 instances the holding period is less than one month. From the above, the A.O. held that buying and selling of shares is done by the assessee with an motive to maximize profits. As the volume and frequency of the transactions is very high as indicated hereinabove, it can be presumed that the basic aim was to get the best profits from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al value, the assessee is allowed deduction only for payment of taxes levied by the local authority in respect of the property. The said proviso speaks specifically about taxes levied in respect of the property. It is not for anyone to stretch the meaning further and includes society charges in the ambit of the proviso. Hence, the A.O. made addition of ₹ 1,17,825/- and added the same to the income of the assessee under the head income from house property vide assessment orders dated 30.12.2008 passed by the AO u/s 143(3) of the Act. However, the AO allowed the standard deduction to the assessee as provided u/s 24(a) of the Act, vide his orders dated 30.12.2008. 6. Aggrieved by the assessment orders dated 30.12.2008 passed by the AO u/s 143(3) of the Act, the assessee filed his first appeal before the CIT(A). 7. Before the CIT(A), the assessee submitted that the assessee is an investor and has consistently invested in shares and securities over a period of years and the same are held as investments/capital assets. It was submitted that during the previous year relevant to the assessment year, the assessee has earned income from sale of shares amounting to ₹ 676,915 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o entered into transactions of purchase and sale of shares where there was no actual delivery. It was observed by the CIT(A) that both the aforesaid transactions were in respect of transaction of purchase and sale of shares where the holding period was less than 12 months. The profit on sale of shares where there was no delivery, was offered to tax by the assessee as speculative income under the head 'Business income'. The income from other transactions where there was actual delivery was claimed by the assessee to be short term capital gains. Such transactions were about 800 in number during the relevant previous year and the companies dealt with by the assessee whose shares were purchased or sold were 200 in number. The holding period was from 1 day to maximum 6 months. The conduct of the assessee in showing income from delivery based transactions as short term capital gains and non-delivery based transactions as business income only showed that but for actual delivery even income from those transactions would have been considered as speculative income and not as business income. The income from delivery based transactions were sought to be projected as short term capital ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tenance charges to be borne by the assessee. The assessee contended that the A.O. while passing the order u/s 143(3) of the Act has restricted the deduction claimed in respect of maintenance charges to the extent of only municipal taxes paid amounting to ₹ 62,175/- while computing income chargeable under the head income from house property . The assessee relied on the following decisions:- (i) Ms. Nandita Banerjee v. ITO, ITA No. 1360/Mum/2000, A.Y. 1995-96 (order dated 08-04-2004). Mumbai Tribunal, SMC bench. (ii) Sharmila Tagone v. Commissioner of Income Tax (2005) 93 TTJ (Mum) 483 ITAT Mumbai bench. (iii) Neelam Cable Manufacturing Company v. Asstt. Commissioner of Income Tax, ITAT Delhi. (iv) M/s Sheriff Constructions v. Asst. Commissioner of Income Tax ITAT Bangalore. Thus, the assessee prayed that deduction with respect to society maintenance charges and municipal taxes amounting to ₹ 1,80,000/- be allowed as deduction as claimed in the return of income filed with the Revenue. The CIT(A), however, vide orders dated 02.12.2011 rejected the contentions of the assessee by relying upon the decision of the Delhi Tribunal in the case of Piccadily Holid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mum/2011 for the assessment year 2007-08 order dated 8-5-2013 and also in the case of ACIT v. Mrs. Vineet Sethi in ITA No. 4324/Mum/2010 for the assessment year 2006-07 vide orders dated 24- 1-2014.The ld counsel of the assessee also submitted that decision of the Mumbai Tribunal in the case of Gopal Purohit(supra) has been approved by Hon ble Bombay High Court in CIT v. Gopal Purohit (2010) 188 Taxman 140(Bombay). The ld. Counsel submitted that rule of consistency has to be followed as in the earlier years and also subsequent years, the Revenue has accepted the said income to be from capital gains and based on the rule of consistency the said income is to be treated as short term capital gains. 11. The ld. D.R., on the other hand, submitted that the assessee has entered into repetitive transactions of sale and purchase of shares. The ld. D.R. referred to page 2-5 of the assessee s paper book whereby the periodwise details of short term capital gains on sale of shares by the assessee shows that assessee has indulged in repetitive transactions of purchase and sale of shares. The Ld DR pointed out the instance that shares of Zee Telefilms Limited were first purchased on 21.10.2005 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that out of the total transactions, the period of holding in over 100 instances is less than three months and in 65 instances, the holding period is less than one month. The transaction in the shares are also repetitive like in the shares of Zee Telefilms Limited, Garware Ship, Gammon,Carborundum Universal, Simbholi Sugar etc. whereby the assessee indulged in repetitive transactions and also sold the shares after holding for short period . Under these circumstances in order to do complete justice in the instant case based on facts and circumstance of the case, we hold that the gains arising from sale of shares held by the assessee up to one month be classified as income from business despite being delivery based transactions, while the gains arising from sale of shares held for more than one month and up-to twelve months should be classified as short term capital gain. We have come to the above decision keeping in view the peculiar facts and circumstances of the instant case as we have observed that in large number of transactions of purchase and sale of shares, period of holding is from 1 day to 30 days, the transactions of purchase and sale of shares being repetitive and the as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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